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Spain Seeks to Aid its Ailing Auto Sector

Spain, Europe's third-largest car maker, prepared measures on Nov. 25 to aid its ailing auto manufacturers and save thousands of jobs as trade data indicated the downturn in the sector had worsened. Prime Minister Jose Luis Rodriguez Zapatero said his government "would do all that it can legally do" to preserve the sector, which accounts for just under 10% of Spain's GDP and 15% of exports.

He said the auto sector would receive "special treatment" in the Europe-wide economic stimulus package that the European Commission is due to unveil on Nov. 26 as part of efforts to combat the continent's recession.

Industry Minister Miguel Sebastian said the government would unveil a plan in January to coordinate efforts by the local governments of regions where car makers are installed to aid the sector.

Spanish car plants will make 300,000 fewer vehicles this year when compared to 2007, a 10.3% drop to a level of production that is similar to that recorded in 1997, Spain's auto manufacturers' association ANFAC said.

Spanish auto production plunged by just over a quarter in October to 206,919 vehicles when compared to the same time last year due to declining demand in the domestic market and falling demand from the rest of Europe, it said.

The president of the Spanish branch of French automaker Renault predicted that sales of new cars in Spain during the last quarter of 2008 will be about half of the figure for the same time last year. "During the final three months of the year, we calculate that the market will experience a decline of between 45% and 55% over the same period in 2007," Jean-Pierre Laurent said.

Spain is experiencing an abrupt economic slowdown as the global credit crunch puts the squeeze on an already weakened construction sector, causing the unemployment rate -- already the highest in the EU -- to rise and consumer demand to contract sharply. The decline in auto sales has led car makers to reduce work hours, lay off staff or fire workers.

Last month Japanese automaker Nissan, in which Renault holds a controlling stake, announced plans to cut 1,680 jobs at two factories in Barcelona, prompting unions to stage a wave of noisy protests in the port city.

Ford plans to lay off about 5,000 workers in Spain for a total of 21 days during the first half of 2009 due to falling demand, union officials said.

The decline in car production in Spain threatens up to 50,000 jobs in the sector, daily newspaper El Pais reported earlier on Nov. 25.

Already about 18,000 of the 70,000 workers directly involved in Spain in car manufacturing have seen their jobs affected either through reduced hours, early retirement or temporary contracts that were not renewed, it said.

Spain made 2.88 million vehicles last year, making it the third-biggest auto maker in Europe after Germany and France, according to the Brussels-based European Automobile Manufacturers Association (ACEA).

The country exports 80% of its auto production, mostly to other European nations.